Case Studies
On day one, we promised these clients that our designs would never utilize off-the-shelf solutions — that their succession designs would be unique to them.
Steel Manufacturing
Steel Manufacturing
Like many entrepreneurs, the owner of this Sub S corporation (appraised at 738 MM), wanted his exit strategy to accomplish many things: (1) reap a personal financial reward; (2) perpetuate his company; (3) reward loyal employees (4) and provide his young children with a lifetime income that has little or no tax obligation. CTC converted the company's Sub S to a C-Corp., sold 55% of the company to an ESOP Trust and implemented a QRP hedged in a proprietary manner to accomplish all the stated objectives. Today the company's enterprise value is $687MM; the ESOP Transaction value stands at $378MM. With our plan, the entire $378 million tax is free of capital gains tax. Plus looking forward to the MSOP team worth $90MM when earned in five (5) years of meeting EBITDA projections.
Home Mortgage
Home Mortgage
Over 90% of this privately held company was in the hands of five (5) owners. The remainder was held by 5000 minority owners. The company's senior execs were aging out, looking to reorganize in a stagnant market. CTC recommended that the company's 41% ESOP make a tender offer to buy the shares of minority owners, but the offer was unsuccessful. As the company was bleeding cash in succeeding months, CTC stood by its client, able to arrange a 20MM loan @5% interest. A year later, a second tender offer was accepted. The loan was paid off in nine (9) months (as the economy improved under a new administration); and the 150MM firm grew from 150MM to 685MM.
Energy Services
Energy Services
Shareholders of an energy services company valued at $190 million were exploring options to take some chips off the table, reward employees for hard work, attract more employees and benefit from growing the company in the future. They considered outside sale via PE buyers and found the prices offered were good. But soon realized this type of sale could not benefit employees and grow the business. CTC was brought in to consult -- to design a solution and prepare a Feasibility Study. After extensive due diligence, the company asked CTC to quarterback the transaction and implementation of an ESOP. A majority of the stock was sold to the ESOP to accomplish their goals for the benefit of the employees, and the minority was retained for future appreciation.
Technology
Technology
A successful IT company with an existing ESOP was approached by a strategic buyer looking to buy the firm at a premium over the current stock price. But the buyer had never purchased an ESOP-owned company and was getting cold feet for fear of the unknown. The Board turned to CTC who had a reputation for helping dozens of ESOPs exit successfully. CTC was engaged on many fronts – buyer, ESOP trustee, management, legacy shareholders, and employees. Ultimately the deal was successful and the employees who had been with the company since the beginning of the ESOP were each paid over 5 years worth of salary into their ESOP retirement accounts.
